The Internationalization of China’s Equity Markets

Juan Cortina, Maria Martinez Peria, Sergio Schmukler and Jasmine Xiao

No 2023/026, IMF Working Papers from International Monetary Fund

Abstract: China’s equity markets internationalization process started in the early 2000s but accelerated after 2012, when Chinese firms’ shares listed in Shanghai and Shenzhen gradually became available to international investors. This paper studies the effects of the post-2012 internationalization events by comparing the evolution of equity financing and investment activities for: (i) domestic listed firms relative to firms that already had access to international investors and (ii) domestic listed firms that were directly connected to international markets relative to those that were not. The paper finds large increases in financial and investment activities for domestic listed and for connected firms, with significant aggregate effects. The evidence also suggests the rise in firms’ equity issuances was primarily and initially financed by domestic investors. International investors’ portfolio holdings in Chinese equity markets and ownership in firms increased markedly only once Chinese firms’ locally issued shares became part of the MSCI Emerging Markets Index.

Keywords: equity financing; equity market liberalization; firm investment; foreign investors; international investors; issuance activity; Stock Connect; portfolio holding; internationalization process; unconnected firm; China's equity markets; Stock markets; Stocks; Foreign corporations; Emerging and frontier financial markets; Market capitalization; Global (search for similar items in EconPapers)
Pages: 62
Date: 2023-02-10
New Economics Papers: this item is included in nep-cna, nep-fdg, nep-fmk and nep-ifn
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Related works:
Journal Article: The Internationalization of China’s Equity Markets (2024)
Working Paper: The Internationalization of China's Equity Markets (2023)
Working Paper: The Internationalization of China’s Equity Markets (2023)
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